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10 keys to negotiating your HR budget

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in Employee Benefits Program,HR Management,Human Resources

Ever had the C-Suite rubber-stamp your HR budget with nary a question or challenge? Neither has Valerie Grubb, who spent most of her career building and justifying budgets in large manufacturing and entertainment companies, most recently NBC Universal.

Along the way, she developed a knack for negotiating with senior executives whose job it was to go through budgets line by line, winnowing out waste and firming up the bottom line. When budget time rolls around, she says, your most important job is explaining how HR contributes to the organization’s larger goals.

“It’s more critical than ever for you to be able to create and defend your budgets,” she told participants at the 2009 SHRM Conference in New Orleans. “You need to be able to demonstrate your ROI. If you can articulate your department’s performance in terms of company goals, it will be much more difficult for the top brass to tear into your budget.”

She offered these tips for handling the delicate process of negotiating your next budget:

1. Couple HR spending with company goals

Don’t assume senior executives can make the connection between the organization’s success and what you do in HR. When you make your budget presentation, spell it out.

2. Demonstrate the ROI and cash efficiency of your initiatives

Be prepared with spreadsheets that illustrate how dollars invested on HR pay dividends in other areas. Not sure? Sit down with other functional heads during the budget development process and pick their brains. How does human capital support their work?

3. Detail value-added line items
What does the employee assistance program bring to the bottom line? Sure it’s a cost center, but it saves money in the long run. Work with your provider to demonstrate the value of that expenditure.

4. Include initiatives that you scrapped—and have one "scapegoat” project

Be prepared to ditch one nonessential project. It shows you’re willing to give a little—to gain a lot. “I always include a project I can scrap,” Grubb said. “I don’t tell Finance that.”

5. Link your budget to improved profitability
Efficiency and good employee relations are great, but profitability is today’s key measure. Speak in those terms and you’ll catch the decision-makers’ ears.

6. Gain Finance’s support along the way

Meet with the money people early on in the budgeting process. Make sure they understand what your priorities are and how HR can help move the organization forward. Ask them to challenge your assumptions. They might wind up being your biggest champions when the budget ax comes out.

7. State your assumptions clearly
When presenting your budget, articulate your understanding of where the organization is and where it’s going. That demonstrates you’ve done your homework—and frames your proposal in real-world terms.

8. Make deadlines during the process
Don’t be last in line when they’re handing out dollars. ’Nuff said.

9. Know every detail of your budget
No one else can help you here: You must know your budget inside out. When the honchos start asking questions, you don’t want to have to shuffle through reams of paper to find the answers.

10. Practice, practice, practice
When the budget spotlight turns to you, be ready. “I’ve presented hundreds of budgets,” Grubb said. “I still practice for every one.”

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